Tag Archives: free market

“The freedom to trade is derived from the freedom to own property. The freedom to own property is derived from the freedom to own ourselves. When you take away the Free Market you take away self-ownership.” – Anthony Freeman

Posted onMarch 19, 2012|Comments Off on Bitcoin and the underground economy

Article by Jon Matonis at Forbes:

Could Bitcoin Become the Currency of System D?

If zeros and ones are outlawed, only outlaws will use zeros and ones.

Cryptography shall always have a place in securing our digital future and most especially in securing our digital value. Advanced public-key encryption for the masses cannot be eliminated nor denied — the genie is out of the bottle and mankind is the better for it. The unintended consequence of regulating or restricting decentralized cryptocurrencies such as bitcoin is that their use as a currency will have been ‘recognized’ officially and that usage will be driven largely underground.

However, underground may not be so bad anymore as Robert Neuwirth points out in his brilliant Foreign Policy article, “The Shadow Superpower”. If aggregated, this $10 trillion global black market is the world’s second largest economy after the United States and it is also the world’s fastest growing economy. The OECD (Organisation for Economic Co-operation and Development) projects that, by the year 2020, fully two-thirds of the world’s workers will inhabit this shadow economy, or “System D.” As Neuwirth elaborates, it refers to the entire untaxed, unlicensed, and unregulated cash-based economy:

System D is a slang phrase pirated from French-speaking Africa and the Caribbean. The French have a word that they often use to describe particularly effective and motivated people. They call them débrouillards. To say a man is a débrouillard is to tell people how resourceful and ingenious he is. The former French colonies have sculpted this word to their own social and economic reality. They say that inventive, self-starting, entrepreneurial merchants who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes, are part of “l’economie de la débrouillardise.” Or, sweetened for street use, “Systeme D.” This essentially translates as the ingenuity economy, the economy of improvisation and self-reliance, the do-it-yourself, or DIY, economy.

Enter bitcoin. All kind of vibrant economic activity is occurring in this informal economy, which in some regions is between 20-60% of GDP or more, and every economy needs a currency. Essentially, bitcoin is the ‘System D’ of currencies — global, decentralized, and non-state sanctioned. It is still early days but as bitcoin bypasses traditional banking and financial institutions, it is a currency off-the-grid just as System D. To deny the existence of System D is to deny the fact that economic participants find ways to survive even during prolonged times of hardship. According to Neuwirth “it asserts an important truth: what happens in all the unregistered markets and roadside kiosks of the world is not simply haphazard. It is a product of intelligence, resilience, self-organization and group solidarity.”

It is inconceivable to think of those in under-developed countries and the developed economies of the eurozone coping without System D activity given the recurring recessions that are exacerbated by the violent central bank-induced business cycles. Despite increasing consumption taxes like VAT (value-added tax), the informal economy can still provide relief through various markets and bazaars. Americans too will need black markets to survive. System D represents the future.